Wednesday, October 10, 2007

A BLOCK of 13 conservation shophouses in Telok Ayer and Boon Tat streets is for sale

A BLOCK of 13 conservation shophouses in Telok Ayer and Boon Tat streets is for sale through an expression-of-interest exercise at an indicative price of $67 million.

This works out to about $1,200 per square foot based on the gross floor area of some 56,000 square feet.

The shophouses are on land that totals 16,987 sq ft and have 999-year leasehold tenure from 1884.

They are zoned for ‘commercial’ use, but Ho Eng Joo, executive director (investment sales) at marketing agent Colliers International, believes that the buyer could amalgamate the interiors into a single large floor plate to achieve greater space efficiency. This would make the property suitable for creative companies such as advertising or design agencies or for financial and professional services firms.

‘The tight office supply and the surge in office rents have resulted in an increasing number of tenants seeking alternative commercial space such as shophouse units, as well as investors looking for well-located shophouse units for investment,’ Mr Ho said.

He estimates the current yield to be around 2.5 per cent. The first storey of the shophouses is now used mainly by food and beverage outlets, while the upper storey is occupied by office tenants.

Mr Ho reckons the potential yield could be 5-5.5 per cent based on rent of about $5.50 psf per month.

It is rare for so many shophouses to be offered in one transaction. The recent sale of three shophouses in Ann Siang Road for $28.8 million worked out to $1,519 psf over their floor area.

Mr Ho said that most shophouse transactions involve individual units. A shophouse in Amoy Street was recently sold for about $1,100 psf, he said.